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Repayment of input tax on property, part of which was later rented out to a charity.
I read Neil Warren’s article in Taxation on the capital goods scheme (‘Hidden perils’ 1 March 2018) and think I might have a VAT problem with a client’s property purchase several years ago.
My client’s trading company bought an office unit in March 2015 for £300 000 plus VAT. It claimed input tax of £60 000 on its March return because it intended to refurbish the property and use it as an office for its engineering consultancy business.
The property was empty (unused) until January 2017 when the keys were handed to a local charity so that it could use the building for its charitable purposes. No rent was charged so the charity enjoyed free use of the building.
My client has now confirmed that the charity will hand back the keys on 31 May 2018 and the company will spend £50 000 plus VAT on improvements with a view to...
